MicroStrategy Buys Bitcoin for $250M as part of capital allocation strategy

MicroStrategy buys Bitcoin for a huge chunk of $250 Million. MSTR has become the first ever public listing giant to buy bitcoin.  Micro Strategy does it as part of strategic capital allocation process.

MSTR declared that it has bought 21.4K bitcoin, with a current valuation of $250 million. Bitcoin has fought through ups and downs for a decade to become an asset class worth investing.

The business intelligence behemoth had already announced it’s new strategy for future capital allocation, in the 2020 2Q quarterly results. The view is that bitcoin is a hedge against inflation.

Since mining its genesis block more than 10 years back, Bitcoin now seems to the best alternative or hedge to the traditional financial system. Bitcoin is useful with its store of value mantra to both institutional and individual customers.


MicroStrategy Buys Bitcoin

In a Business wire post, MicroStrategy CEO Michael J. Saylor shares that the company’s purchase of Bitcoin is due to its new strategic capital allocation policy. Consequently, they seek to increase value in the long term for their shareholders.

This huge investment mirrors their trust that Bitcoin is a trustworthy store of value. Also, it is an amazing investment asset class with heavy upside waiting for the early adopters.

After analyzing different assets for a profitable investment, MicroStrategy observes distinguishing Bitcoin properties leads them to make a huge investment. They think Bitcoin is the best hedge investment asset out there right now. Also, there’s a huge prospect to have a multi-bagger return because of macro risks in the global economy.

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Faith in Fiat Currency Erodes?

The CEO says macro factors influencing the economic direction and business environment creates risks in the long term for their treasury funding program. That exactly drives their decision to invest in Bitcoin.

Macro factors influencing their disbelief in Fiat

  1. Covid-19 Pandemic influencing economic crisis
  2. Excessive Government fiscal stimulus actions (quantitative easing)
  3. Geo-political risks and global economic uncertainty

Microstrategy Buys Bitcoin

He believes that these macro factors may have a primary devaluing effect for fiat currencies in the long term horizon. Many other corporate converntional asset classes may not work too. So, MSTR is wishing to be a step ahead of their competitors and try to maximize shareholders value.

MicroStrategy has not been explicit on their method to buy bitcoin. It may be through Cryptocurrency exchange or through an OTC desk specializing in big deals. MSTR is also not publicly stating who is the custodian of their bitcoin.

Bitcoin is definitely digital gold. It is much smarter and faster than any other sound money options we have. Microstrategy expects Bitcoin value to pile up with massive advances in tech and user adoption. Network effect will help grow this nascent asset into an institutional grade asset soon with much more appreciation potential.

Parting Thoughts

Microstrategy buys bitcoin and puts it publicly unlike any other company has done so far. They are the first public company to do so and it requires courage to be a visionary leader in anything.

MicroStrategy’s recognition of Bitcoin as a legit investment with wide adoption and liquidity is a welcome move. It is definitely superior to holding cash in your bank account, with high appreciation potential.

The Business Intelligence behemoth Bitcoin that is the best asset right now to hedge against inflation. You will now suddenly a lot of competitors FOMO into bitcoin soon. Are you following the lead of Microstrategy and amassing bitcoins for yourself before it is gone?

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